Saturday, September 13, 2008

Donkey Deflation

there has been a lot of talk recently about the bursting of the Obama Bubble, which is to be expected. the unimaginative legions of journalists and political bloggers, unable to visualise the future, are quick to pounce on the recent past and concoct long-winded 'explanations' for what has already transpired.

but Trend & Value refuses to waste readers' time or so insult their intelligence. this modest weblog simply predicts the future, throws up a graph for eye candy, and then comes back a few weeks later to say Told Ya So. and all the reader has to do is check the site several times a day, or subscribe via an RSS feed. (and read the disclaimer.)

am I right all the time? of course not. most of the time? possibly, but I haven't even kept track. perhaps towards the end of the year I'll take an inventory.

here is a chart of the Obama intrade contract since I first posted 'Short Obama' a couple weeks ago:

then when the contract hit 50 at the beginning of the week I suggested that it would trade 'roughly between 45 and 55' over the coming month or so. the price quickly bounced back up to 55, and then swiftly fell to a tad below 43, though the number of trades below 45 could be counted on one hand.

from the 45ish level is where one would expect a rebound, and we've seen the price come up some from there. will we see some equilibrium develop in the high 40s/low 50s, or will renewed selling pressure sink the price down quickly to 40, the next probable support?

I don't Know. so far this Donkey Deflation has coincided with the bear reaction in energy prices. in July the Obama contract topped out above 65 about the same time as Crude Oil peaked. (the percentage declines in both markets have been astonishingly similar.) now with oil hitting a possible support level at 100 (didn't I mention something about that?), at least a minor rebound looks somewhat likely. we shall see if the correlation holds.